Government guaranteeing Johor Corp? Please don't ridicule us any further!

This act of inconsistency by the federal government is just sheer disappointment for tax payers like us. Firstly, if you can remember CIMB was the bank which helped JCorp to leverage further by providing them financing to increase their stake in QSR and KFC. Why do they need that? For obvious reasons as they felt that assets such as KFC should go under the hands of the state agencies and certain groups. Do they manage KFC well? Hell No! Yes, they benefited from the valuation of KFC improving substantially over the last few years but KFC is still the same company which was just a good brand. It can be better!

Secondly, they want to delist KFC by buying up the entire group consisting of Pizza Hut and KFC? This will gear the state fund further. My question is why do they need to do that? Are they trying to push assets such as KFC out of reach of the investment public. If JCorp is not in financial difficulties that needs federal assistance, I am ok with it - but now they are asking for government guarantee, part of the reason is due to they needed more funds to privatize QSR and KFC?

May I know who is doing this deal again. CIMB?

Thirdly as in the article, the guarantee is to allow JCorp "to spearhead development efforts in Johor". Err... you need more KFC and Pizza Hut shares to spearhead development of Johor?

These ridiculous statement is just belittling the intelligence of tax payers! And is the government trying to nationalize (through agencies like Khazanah and JCorp) all the good assets that are in the country? No wonder business people are moving their liquid assets out of the country.

Another thing I am wondering is that JCorp owns some very valuable companies in the form of KFC, QSR, KPJ, Kulim. Can't they pledge some of the shares? Why do they need the federal government to guarantee that?

I reproduce some part of the article below:

JCorp, the strategic investment arm of Johor, announced yesterday that it planned to issue a sukuk wakalah Islamic finance instrument worth RM3 billion to be directed at redeeming the state-owned corporation’s outstanding bonds worth RM3.2 billion maturing at end-July. The guarantee, approved by the Cabinet, represents a major departure from the government’s treatment of loans by state agencies. Typically, the federal government provides its backing for fresh loans taken by state agencies and shuns providing support for fundraising schemes directed at refinancing existing debt.Bankers and investment analysts said the government’s move to come to JCorp’s rescue sets a potentially negative precedent because it could encourage other financially stressed state agencies to propose similar debt restructuring arrangements.

JCorp president and chief executive Kamaruzzaman Abu Kassim reasoned that the Cabinet’s guarantee of the new Islamic financial instrument is to ensure the state agency continues to spearhead development efforts in Johor. “JCorp has a combined role as a public enterprise, but more important is that JCorp has in the past until now played the developmental role of the Johor state. Over the years, we have gone beyond the state because of the interest of our businesses, especially the hospitals and food chains and so on,” he said.

JCorp has been under pressure to deal with its debt problems and the disposal of key assets, such as Kulim (M) Bhd, QSR Brands Bhd and KFC Holdings (M) Bhd (KFCH), featured prominently in its debt restructuring plans. The group had declared plans to sell parcels of land in Johor Baru and Kota Tinggi to meet its debt obligations. Company executives said the new sukuk refinancing plan will allow it to keep its strong cash generating assets. JCorp is considering the privatisation of its listed entity QSR and KFCH in a joint venture with private equity firm CVC Capital Partners. The privatisation of both companies will require JCorp to fork out about another RM5 billion.

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